Section 80A(5)

Section 80A(5) — the law in short

What the courts have decided on section 80A(5), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• 360 One Distribution Services Ltd v DCIT — s.80A(5) kills a s.80JJAA claim first made before the Commissioner (Appeals) ITATHelps departmentNo later treatment found
  We missed the s.80JJAA claim in the return and raised it for the first time in appeal, with the Form 10DA report in hand. Can the Commissioner (Appeals) or the Tribunal still allow it?
  No. The Mumbai Tribunal held that s.80A(5) disentitles an assessee from claiming a deduction under s.80JJAA where the claim was not made in the return of income, and that this disposes of the matter without going into any other aspect. It was no answer that the chartered accountant's Form 10DA had been issued, because the Tribunal found nothing on record that prevented the assessee from raising the claim and filing Form 10DA before the Assessing Officer during the scrutiny proceedings, which ran on until the assessment order was passed. The appeal was dismissed.
• Statutory position — s.80-IAC: the start-up deduction, the incorporation cut-off, and the s.80AC bar on a late return CBDT Circulars & InstructionsCuts both ways
  Until when must a start-up be incorporated to claim s.80-IAC, and what happens to the claim if the return is filed late?
  As the section currently reads, an eligible start-up must be incorporated on or after 1 April 2016 but before 1 April 2030 — the date was substituted for 2025 by Act No. 7 of 2025 with effect from 1 April 2025, which is the extension relied on here. The deduction is one hundred per cent of the profits of the eligible business for three consecutive assessment years, claimable at the assessee's option out of ten years beginning with the year of incorporation, and it is lost entirely if the return is filed after the due date under s.139(1), because s.80AC bars every deduction under the Chapter VI-A heading 'C.—Deductions in respect of certain incomes' in that event.
• Statutory position — s.80JJAA: thirty per cent of additional employee cost for three years, and every condition that defeats it CBDT Circulars & InstructionsCuts both ways
  My client wants to claim s.80JJAA for new hires. What exactly is the deduction, and which conditions actually cause claims to fail?
  Section 80JJAA gives an assessee to whom s.44AB applies, whose gross total income includes profits and gains derived from business, a deduction of thirty per cent of the additional employee cost incurred in the course of that business in the previous year, for three assessment years including the assessment year relevant to the previous year in which the employment is provided. The conditions that defeat claims in practice are in the Explanation, not in the operative sub-section: an employee earning more than twenty-five thousand rupees a month is not an "additional employee", nor is one employed for less than two hundred and forty days in the previous year (one hundred and fifty days for a manufacturer of apparel, footwear or leather products), nor one who does not participate in a recognised provident fund, nor one whose entire Employees' Pension Scheme contribution is paid by the Government. And the additional employee cost is nil for an existing business if there is no increase in the total number of employees over the last day of the preceding year, or if the emoluments are paid otherwise than by account payee cheque, account payee bank draft, electronic clearing system through a bank account, or such other prescribed electronic mode.
• Statutory position — the Explanation to s.10AA(1): the SEZ deduction is capped at total income, and a late return kills it CBDT Circulars & InstructionsCuts both ways
  My client has an SEZ unit in profit and other units in loss. Does the s.10AA deduction come off the unit's own profit before the other units' losses, or only after? And does a late return matter?
  The Explanation to s.10AA(1) now settles the arithmetic against the taxpayer at the outer limit: the deduction "shall be allowed from the total income of the assessee computed in accordance with the provisions of this Act, before giving effect to the provisions of this section and the deduction under this section shall not exceed such total income of the assessee". So whatever the unit-wise computation produces, the allowance cannot exceed the assessee's total income computed after every other provision of the Act — including the set-off provisions — has been applied. Separately, the proviso to s.10AA(1) denies the deduction outright to an assessee who does not furnish a return of income on or before the due date under s.139(1).

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.